Estate Roads

Whether you or your client have an interest in part or all of an industrial estate or business park, problems can arise out of multi-occupation as occupiers compete for space, whether legally or otherwise. Carl Csukas, Partner in Property Litigation, looks at two recent cases, both of which resulted in proceedings being issued.

  • Our client owned the freehold of a four storey vertical style factory, developed in the 1920’s/30’s, in Acton. It was part of an estate with six or seven other, similar buildings all accessed off a single estate road. As is often the way in property law, problems arose due to economic progress and development. As with most of the buildings, my client only had five or so parking spaces. In the 1920’s/30’s car and commercial vehicle ownership was at a low level and vehicles were small. The nearest main road had become a red route and the side roads required residents’ permits. Occupiers and non-occupiers were, therefore, in the habit of parking unlawfully on the estate road. A party purchased the freehold of the largest estate building, at the far end of the estate road, and the freehold of the estate road. So as to secure and ease access for itself, it sought a declaration that parking on the estate road by other building owners was unlawful and an injunction to prevent such parking. At trial we defeated the claim and established prescriptive parking rights over the estate road in favour of our client (and the four other occupiers named as defendants). The claimant had to bear the legal costs of five parties for its trouble.
  • Our client owned the freehold of offices/warehousing opposite Wembley Stadium. The greater site had developed piecemeal over many decades, there being a jumble of units, access roads and poorly defined boundaries. Running from the public highway there was a legal, private right of way across our client’s land serving several other units. In all relevant deeds that right of way was defined as being 12 feet wide at all points. That legal right of way had been created several decades before on the breaking up of a larger Title. The physical situation on the ground was that the access road of which the legal right of way forms part was actually more than 20 feet wide and had been so for many years. Our client maintained a right to park cars along that part of the access road which was not part of the 12 feet wide legal right of way. One of the unit holders that had the benefit of the legal right of way claimed that it had obtained a prescriptive right of way over the balance of the access road where our client parked and that such parking was an interference with that prescriptive right of way. Obtaining a prescriptive right of way would add value to that unit holder’s land as it would allow large HGV’s to access its unit. Proceedings were issued. Our client claimed trespass and an injunction. The unit holder sought a declaration that it had acquired a prescriptive right of way over the balance of the access road and an injunction to prevent parking by our client. This did not go to trial and a settlement was achieved. Our client is now going to purchase the other unit, granting the unit holder a short term lease back to give it time to relocate it’s business.

Carl Csukas says “The moral is that whether you own the freehold of an industrial/business/retail park or you own or lease a unit on such a park, it is not just the state of repair of the buildings and payment of rent and service charges which need to be thought about. Parking and access rights are extremely valuable and are closely guarded. Deed plans need to be carefully scrutinised and compared with physical reality before interests are acquired. If necessary specific pre-contractual enquires need to be made and evidence sought, perhaps in the form of statutory declarations, from the vendor, predecessors in title or neighbours. Beyond that what is happening on site needs to be closely monitored or otherwise you or your clients could become embroiled in claims of trespass or for prescriptive rights.”

Acquisition of prescriptive rights is complicated and there are a number of ways in which rights can accrue, but under the Prescription Act 1832 for rights of way and rights to park the basic prescriptive period will be 20 years. The Property Litigation Team are experienced in advising on this type of dispute both before and after acquiring a property.

If you have any queries or concerns do not hesitate to contact Carl Csukas (on 0121 710 5842) or Victoria Khandker (on 0121 710 5843) who will be happy to assist.

TC and HJA article 11.7.13

Whether it’s the installation of racking or demountable partitioning, the addition of a mezzanine floor or an upgrade to the electrical system, a tenant’s ability to customise existing or prospective premises is fundamental. This requirement has to be balanced against Landlords’ concerns to regulate the type and extent of alterations. Alterations which are unsuitable or poorly designed may have a negative impact on the Landlord’s investment. Solicitor Hedley Adcock and Consultant Tim Coplestone in the Real Estate Team look at points that both need to consider before they start the building work.

“This is an area where we are increasingly being instructed by tenants wishing to facelift existing premises or simply to reconfigure floor space and by new Tenants on the initial fit out”, Hedley comments. “Commercial lease agreements invariably address the issue of alterations, setting out the extent to which premises can be adapted and what should happen to them at the end of the lease. However, many tenants are either unaware of their obligations or decide to “sin and seek forgiveness” rather than seeking consent and risk their plans being denied by cautious Landlords. Depending on the nature of the premises, the length of occupation and the tenant’s intended use, alterations clauses in the lease require careful consideration.”

Tim notes “Tenants need to think ahead when it comes to fitting out premises or future upgrades. Typically tenants are prevented from making structural alterations to premises altogether. Landlords rarely allow premises to be demolished or extended unless there is an overall benefit. More commonly tenants do not wish to make wholesale changes and simply intend to reconfigure the internal layout.”

To ensure that the Tenant’s proposals are acceptable, most leases allow internal non structural alterations with the prior consent of the Landlord. Since most alterations are regarded as improvements, the Landlord cannot generally withhold consent. However, it is still common practice for Landlords to review specifications, plans and drawings before approving the changes. If the Landlord does grant consent it should be formally documented in a Licence for Alterations and kept with the lease. In certain cases, the Landlord may even require a security bond to ensure any major alterations are completed.

“We are frequently reminding Landlords not to forget to seek any third party consents before it grants a Licence for Alterations. Banks, Superior Landlords and Tenant Guarantors with interests in the property may need to be involved.” warns Hedley. Frequently, banks hold security on investment premises and any major alterations may impact on the value of that security. If the Landlord is itself a tenant, it must check the terms of its own lease to ensure whether it needs consent from a Superior Landlord. And most recently the High Court decided in Topland Portfolio No. 1 Ltd v Smiths News Trading Ltd [2013] EWHC 1445 (Ch that a Tenant’s guarantor had been released from its liabilities completely simply because it had not consented to the Tenant’s alterations.

However, certain works do not always amount to alterations. In Hagee (London) v Co-operative Insurance Society (1992) 63 P. & C.R. 362, replacing plant was not held to be an alteration.

Irrespective of the need for landlords consent, tenants are often unaware that alterations must be removed at the end of the lease. Tenants must hand back premises to the Landlord in the previously unaltered state. “In practice, Landlords may be prepared to let the alterations remain but this should not be assumed.” notes Tim “The cost of taking the alterations out at the end of the lease should be factored in or the Landlord should be asked to expressly waive any requirement for reinstatement at the end. Landlords may be reluctant to do this since they may have to pay out compensation for any increase in value of the building, if the alterations remain.”

For more information and advice on any aspect of Tenant alterations please contact either Tim or Hedley the Real Estate Department on 0121 233 4333.

Last Will and Testament

For many people, executing their Will can be a weight lifted off their mind. However, unless care is taken to ensure that all of the formalities required for a valid Will are met, all that hard work can be in vain. Mark Abrol, Partner and Head of Contentious Probate, and Mark Terrar, an Assistant Solicitor within the team explain how Wills draftsmen can get it right and what the consequences can be if they get it wrong.

“We see this all too often. The intentions of the deceased are clear to all in the final document, but because attention was not paid at the time, the Will is not executed properly. The Will is then declared to be invalid and the deceased’s wishes unable to be honoured.” Mark Abrol comments.

Section 9 of the Wills Act 1837 provides that a Will is not valid unless:

(a) it is signed by the Testator;
(b) it appears that the Testator intended by his signature to give effect to his Will;
(c) the signature was witnessed by at least two witnesses present at the same time;
(d) each witness attests and signs the Will or acknowledges his signature in the presence of the Testator.

Mark Terrar notes “If any one of these conditions have not been met, the Will will be declared invalid. The consequences of a Will being declared invalid due to want of formalities and execution may be catastrophic for a beneficiary and they may look to alleviate their loss by blaming the person who was responsible for drafting the Will.”

How can this be avoided?

Best practice is if the draftsman is present when the Will is executed. They can best ensure that the requirements of Section 9 are complied with if they are there. Attendance at the execution is also a final opportunity for the draftsman to confirm that the Testator understands and is happy with the Will. Draftsmen should also document the meeting in which the Will is signed in a file note that summarises how the Will was executed. This note should be made contemporaneously and kept on the Will file.

Ideally, the execution of all Wills would take place in the presence of the draftsman. However, there may be various reasons why draftsmen have to rely on the Testator executing his Will without the draftsman being present. If the draftsman is not present when the Will is being executed, the draftsman should provide the Testator with very clear instructions as to how the Will needs to be signed and witnessed. These instructions must include a clear statement setting out what the consequences will be if these rules are not adhered to. This will help to protect the draftsman’s position if a claim is made on the basis that the Will was not executed properly.

The 2004 case of Humblestone v Martin Tolhurst Partnership [2004] EWHC 151 (Ch) is a case in point. A Will was sent out to the client for signature by the solicitor who drafted the Will. The Will was witnessed but the Testator himself never signed the Will. The Will was then returned to the solicitor for safekeeping but the solicitor failed to notice that the Will had not been signed by the Testator. The firm of solicitors was held to be negligent as it was held that the firm was under a duty to check that the Will was properly executed even if not specifically asked to do so.

Mark Abrol noted “It is important not to be complacent about execution as the Section 9 formalities are non-negotiable!”

The Contentious Probate Team at The Wilkes Partnership regularly advises individuals on their ability to challenge the validity of a Will. The Team also advises practitioners on the best practice to adopt when drafting Wills. If you wish to discuss any issues relating to the drafting of a Will, please contact Mark Abrol or Mark Terrar.

GS article (lit)

Many people assume that when they are given legal advice on their affairs – such advice increasingly being offered by their accountant, insurer or a specialist company (often through an insurance policy) – that advice is “privileged” or “confidential”, and that they cannot be forced to reveal that advice to anyone else. However, a recent decision of the Supreme Court has confirmed that is only the case where such advice has been provided by a member of the legal profession such as a solicitor.

The case of R.(on the application of Prudential plc and another) –v- Special Commissioner of Income Tax and another [2013] UKSC 1, involved legal advice being given by chartered accountants in relation to a tax avoidance scheme. HMRC issued a statutory notice under section 20 of the Taxes Management Act 1970 requiring Prudential to disclose all documents and advice relating to the scheme. Prudential argued that because the advice was of a legal nature, it should attract legal advice privilege and therefore, they were not obliged to disclose that advice to HMRC. Prudential argued that it was the nature of the advice, not the status of the adviser, which should determine whether it was protected by legal advice privilege.

The Supreme Court disagreed. It accepted HMRC’s arguments that legal advice privilege only applied to communications in connection with advice given by lawyers such as solicitors or barristers. To extend legal advice privilege to other professions – such as to advice of a legal nature given by accountants – would lead to too much uncertainty as to when the rule applied and when it did not. In order to retain that certainty, only advice given by lawyers should be (and is) capable of being protected in this way.

Gavin Evans, Associate in the Commercial Litigation team at The Wilkes Partnership, comments:

“The decision of the Supreme Court in this case is important both for non-legally qualified professional advisers, such as accountants, and for their clients, be they businesses or individuals. It emphasises that although there is an increasingly crowded market for legal services, and many other professional advisers routinely give legal advice, that advice does not attract the same protection from disclosure as it would do if given by those in the legal profession. That can lead to difficult and embarrassing situations if that advice is required to be disclosed as part of a Court process.

Therefore, where sensitive and confidential advice is to be given, there is a strong incentive for all concerned to make sure that a legal professional such as a solicitor is involved in the process.”

The Commercial Litigation team at The Wilkes Partnership regularly advises on contentious and sensitive commercial and financial disputes. If you wish to discuss any issues relating to legal advice privilege, please contact Gavin Evans.

IMAG0796

The Wilkes’ Corporate team based at the firm’s Birmingham office have acted as lead advisors on the management buy out of Fitzgerald Contractors Limited – winner of Insider’s Deal of the Month for May.

Corporate Partner Rick Smyth, solicitor Kathryn Morgans and trainee Charlotte Doyle were supported by a number of specialists from across the firm, including property and employment. Rick Smyth said, “Having been involved with the business for many years through Thomas Vale, it was rewarding to work with the management team again and help bring the business full circle back into private hands.  Fitzgerald has always retained a strong, independent identity throughout its time within the Vale Group. It is the size of business which is very much in our sweet spot – and we were delighted to be involved.”

Fitzgerald, which turns over £20m and has more than 100 staff, was acquired by Worcestershire-headquartered Thomas Vale in 1993 and continued to trade and develop as an independent business within the group. The business was part of the sale of the Thomas Vale Group to French construction giant Bouygues in April 2012.

Managing Director Nick Coley said “We were delighted to have completed the acquisition of Fitzgerald. The Wilkes’ team supported us from start to finish throughout the process. They helped us work calmly and methodically through a number of challenges on the deal – and always with good humour. We enjoyed working with them.” He added “I am confident that as an independent company, Fitzgerald will be able to offer an even greater top-down commitment and focus to our clients.”

Chairman David Newcombe said, “As always, the team provided us with clear, pragmatic advice – delivered in plain English – which helped us to ensure we struck the right balance.  They were an ideal legal partner for this sort of transaction.”

The MBO was Insider Deal of the Month. Insider editor Kurt Jacobs (commenting on the Deal of the Month) said: “What’s particularly interesting about this deal is that, despite the dire position it has been over the past few years, there’s real confidence in the future of construction in some quarters.” He added: “Certainly the strength of Fitzgerald’s client list makes it understandable why the management team is so confident of the business’ long-term prospects and clearly relishing the opportunities that greater freedom will bring.”

For more information, please contact Rick Smyth on 0121 710 5932.

For most of us updating our Will is the last thing on our ”to do” list. In today’s busy lives, not only are there too many, far more pressing (and interesting) things to do, it can also serve as an untimely reminder of your own mortality.  However, for most the peace of mind that one can achieve from knowing that you have properly considered and provided for the best possible financial outcome of your nearest and dearest – just when they need it most – far out-weigh the inconvenience.

Private client partners Andrew Hasnip and solicitor Matthew Parr consider when it should be changed – and the downsides of putting it off.

Andrew Hasnip comments, “Many people consider that once they have done a Will once, then they can forget about it. However, a Will is a fluid document and should reflect your circumstances.  As and when those change in terms of your finances, family, friends or tax position, so should your Will. For this reason it is important to consider reviewing your Will on a regular basis, perhaps every 3-4 years.”

Matthew Parr adds, “Whilst most people would be doing well to do even that, there are a number of circumstances which should automatically trigger an immediate review of your Will if you are to avoid potentially expensive and unintended consequences.”

Death of a Beneficiary

A professionally drafted Will will often make provision for the death of a main or sole beneficiary but should a beneficiary pre-decease you it is worth considering whether the inheritance that they would have received is ‘diverted’ to another beneficiary of your choosing or simply left to be administered according to the intestacy rules which may not accord with your wishes.

Family Circumstances

You may have recently become a parent and you may wish to consider whom to appoint as Guardians of your child or children. You may also want to provide for your child in your Will or make a specific provision for any grandchildren that may arrive in the future.

Marriage

Your Will is automatically revoked if you get married unless it is drafted specifically in contemplation of a particular marriage. Your family will have to deal with an intestacy if you do not make a new will in those circumstances.

Divorce

Any gifts to your spouse will be automatically revoked on divorce but should your entire estate be left to him/her then it is worth considering whom you wish to inherit in their place.

Mental Incapacity of an Executor

A Will remains valid even if none of your original chosen Executors are unwilling or indeed unable to act because they have died. Solicitors are common choices for Executors because of their expertise but also because it is highly unlikely that the appointed firm will be unable to act in many years to come.

Dying intestate can lead to unnecessary inheritance tax liabilities, disputes between family and friends and ultimately not making a Will is a false economy. Having a Will drafted by a professional may be less expensive than you anticipated and could provide you and your family with much needed peace of mind.

If you would like to discuss any of the above matters or make a will, contact Andrew Hasnip or Matt Parr

 

W&Stakeover

Birmingham law firm The Wilkes Partnership has announced plans to merge with Solihull-based Williamson & Soden solicitors. The merger will come into effect on 14 May 2013.

Bucking the recent trend of law firm closures in the West Midlands, the merger of Wilkes and Williamson & Soden will form a firm with a combined turnover of £10 million, with 19 partners and 145 employees overall.

Nigel Wood, senior partner at The Wilkes Partnership, comments: “Williamson & Soden is an established and successful law firm and will be a valuable addition to The Wilkes Partnership brand. This merger brings together two complementary commercial law firms that have each successfully survived challenging economic times, with both maintaining an impressive client base throughout the recession. It will result in a bigger firm with an increased pool of expertise than can offer true excellence in client service.”

The Wilkes Partnership will retain its Birmingham city centre head office, and Williamson & Soden’s commercial and private client services will become part of The Wilkes Partnership. Williamson & Soden’s Solihull office will be rebranded and will continue to serve both new and existing clients in the Solihull area.

All employees from both firms will be retained, with Ian Williamson and John Soden both taking on consultant roles.

Ian Williamson, managing partner at Williamson & Soden, adds: “The merger with The Wilkes Partnership will create a firm with a significant presence in the Midlands, as our firms both have a strong track record of meeting the needs of our commercial clients. It will be business as usual for all existing clients, with the added benefits that an increase in available expertise can bring.”

The criminal law services provided by Williamson & Soden will continue to operate under the Williamson & Soden brand.

The Growth and Infrastructure Act 2013, which received Royal Assent on 25 April 2013, creates a new type of employment status – employee shareholder status. This will become effective in the Autumn (possibly 1 September 2013).

This is a new type of employment status, under which an employer and employee can agree that, in consideration of the individual becoming an “employee shareholder” (instead of an employee), the company will issue or allot a minimum of £2,000 worth of shares to the individual, with any gains made on the first £50,000 of shares being exempt from capital gains tax.

An employee shareholder will have the same rights as an employee except the following:

  • No right not to be unfairly dismissed (except in health and safety cases, automatically unfair dismissal cases, or cases where the dismissal is discriminatory).
  • No right to a statutory redundancy payment.
  • No right to make a flexible working request, except for employee shareholders returning from paternity leave, who will be restricted to making a formal request for flexible working to the period of 14 days beginning with their return to work.
  • No right to request time off for study or training.
  • The employee must give 16 weeks’ notice if they want to return early from statutory maternity, adoption or additional paternity leave.

The House of Lords only accepted the new clause on employee shareholder status following certain concessions made by Government including: provision of a written statement explaining to employees the rights they are giving up; employees being given independent legal advice on the offer of an employee shareholder contract (the reasonable cost of which must be met by the employer); and employees being entitled to a seven-day “cooling off” period. Employees are also protected from dismissal or other detriment if they refuse to switch to an employee shareholder contract.

Pam Sidhu, Associate in the Employment department comments: “The Government’s thinking behind this new legislation was to boost employee engagement and productivity, and incentivise businesses to hire by removing the fear of being taken to employment tribunal. However, the new status is so bogged down with red tape that the uptake is likely to be slow. One significant issue is that there are significant carve outs from the employment rights employees give up – employee shareholders can still complain of discrimination, for instance, which are costly claims to defend, as well as other rights like unfair dismissal related to “whistleblowing”. Employees will also need to receive independent legal advice on the offer of an employee shareholder contract, paid for by the employer, irrespective of whether employees actually take up the offer or not. Employers will need to carefully weigh up the pros and cons of the new status to decide whether it is worthwhile offering to their staff.”

For further information please contact Pam Sidhu on psidhu@wilkes.co.uk or 0121 710 5815

The Mental Health (Discrimination) Act 2013 came into force on 28 April 2013 bringing about important changes of which company directors should be aware.

The Act amends the model articles set out in Schedules 1 to 3 of the Companies (Model Articles) Regulations 2008 (SI 2008/3229) by removing provisions in those articles which require the automatic termination of a director’s appointment if that director’s rights or powers are restricted by a court order on mental health grounds.

Many newly incorporated limited companies (both those limited by shares and guarantee) take up the current model articles prescribed by the legislation and so may find it more difficult to terminate a director’s appointment on mental health grounds, without repercussion (such as a claim under the Mental Health (Discrimination) Act 2013 for discrimination). Equally, companies who have adopted bespoke articles of association in the past, often including provisions purporting to terminate the appointment of directors on mental health grounds, may find that such provisions are considered to be discriminatory.

Jeremy Parkin, Partner in the Corporate Department comments: “The role of company director can undoubtedly be a demanding and stressful one and mental health issues are unfortunately not uncommonly encountered in this context. The changes to the model articles bought about by this piece of legislation add a further layer of complexity to the operation of articles of association and shareholders agreements in terms of what should be considered by company directors”.

Termination of a director’s appointment on mental health grounds are common provisions in many articles of association and are often a requirement of Venture Capitalist investors. Directors should be aware that such provisions may no longer be enforceable and are encouraged to review their articles of association to check that they do not fall foul of the Mental Health (Discrimination) Act 2013. Amendments should be made to the articles where necessary. It is still possible to remove directors where there is objective justification for so doing.

The Wilkes Partnership’s Corporate team have particular expertise in assisting companies with the drafting of articles of association and shareholders agreements in order to regulate both the day to day activities of companies and the personal relationships between directors and shareholder investors.

If you would like advice or assistance in connection with your company please do not hesitate to contact us.

Following a number of BIS consultations, new regulations, Companies Act 2006 (Amendment of Part 25) Regulations 2012, came into force on 6 April 2013 changing both the requirement and the way that charges, debentures and other security are registered at Companies House.

Corporate Partner Kate Hackett commented “Whilst often the lender will take control of the registration process, it has always been and remains the primary responsibility of the Company. Both companies and lenders need to be aware of these changes”.

The aim of the changes is to:

  • provide a single scheme applicable to all UK companies for the registration, alteration and satisfaction of charges;
  • create a system that is easier to use;
  • improve access to information about registered charges.

What needs to be registered?

The old regime set out categories of charges which must be registered whereas under the new regime a company that has created a charge, or any person interested in that charge, may, subject to certain exceptions register that charge. Therefore registration is now no longer compulsory and failure to register a charge is no longer a criminal offence.

However, in practice, because of the sanctions for non-registration of a charge created by a company, a prudent charge holder will register any charge it takes from a company.

Charges that cannot be registered at Companies House are; a rent deposit, a charge created by a member of Lloyd’s and charges excluded from registration by other legislation ie financial collateral pursuant to Financial Collateral Arrangements (No 2) Regulations 2003.

Consequences of non registration:

  • security is void against a liquidator, an administrator and any creditor of the company;
  • amount secured becomes immediately payable.
  • criminal offence for failing to register a charge has been removed.

How do you register the charge?

You can either register by post (as with the old regime) (fee £13) or by a new online registration service (fee £10). You will need to apply for the necessary access codes from Companies House to register online. The Companies House forms have changed from the old ‘MG’ series of forms to ‘MR’ forms.

The new forms require a new simplified ‘statement of particulars’ (company name, number, date charge created etc). Short particulars are needed for land, ship, aircraft or intellectual property but less detail is needed on the extent of the assets charged. You do have to specify whether the charging instrument contains a floating charge (and, if so, whether it covers all the property) and whether the charge prohibits or restrict the company from creating further security that will rank equally with or ahead of the charge.

A certified copy of the charging instrument must be sent to the Registrar. An original document must not be submitted as Companies House will not return it. If filing electronically, the certified copy must be in PDF form (format 1.2 to 1.7 only and maximum file size of 10MB). Certain information may be redacted from the certified copy document, including personal information (excluding a person’s name), number/identifier of a bank and a signature.

When must a charge be registered?

The period allowed for delivery is 21 days beginning with the day after the date of creation of the charge (unless an order allowing an extended period is made).

How is registration of the charge evidenced?

A 12 digit unique reference code is allocated to the charge and a note is placed on the register recording that reference code. A copy of the registration form and charging instrument will be kept on the public record.

What information do companies have to retain?

Companies are no longer required to maintain their own registers of security with their statutory books. However, companies do need to have copies of relevant charging instruments (creating or amending a charge) available for inspection. These may be certified rather than original copies.

When do the new provisions apply?

The new provisions apply to all charges created on or after 6 April 2013. Any charges created before 6 April 2013 must be registered in accordance with the old regime even if they are registered at Companies House after 6 April 2013. The new provisions relating to amendments to charges, enforcement of security, release and satisfaction will apply to any notifications made on or after 6 April 2013, regardless of when the charge was created.

The proposed new security registration regime for LLPs is largely the same as that for companies.

If you would like to discuss any of the issues arising from the above please contact either Kate Hackett or another member of the Corporate Department.